Pakistan Daily Economy Update - 28 September

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1. September 28 , 2022 KCCI - eBulletin Fixed broadband: PTA issues revised QoS regulations PTA has issued revised ‘Fixed Broadband Quality of Service (QoS) Regulations, 2022’. The regulations include increased minimum fixed broadband internet speeds for download data to 4Mbps (up from 256 kbps) and 2Mbps upload. 80% of the advertised download speeds to be available at all times. Moreover, the PTA shall also implement and execute the recurring National Broadband Measurement Program (NBM). Based on technological advancements in fixed broadband networks, thresholds that are more stringent have been set for existing KPIs (e.g. Latency, Packet Loss, Jitter, etc.). Furthermore, new set of KPIs have been introduced, including Voice over IP (VoIP) services, Web Page Loading Time, and Bandwidth Utilization. BR. Foreign investors: Jul-Aug repatriation of profit, dividend plunges 93% YoY Repatriation of profit and dividend by foreign investors fell sharply, i.e., 93% during 2MFY23 due to economic slowdown. SBP reported that foreign investors repatriated $ 28.2Mn during Jul-Aug’22 as compared to $ 396.4Mn during 2MFY23, depicting a decline of $ 368.2Mn. The detailed analysis revealed that repatriation from FDI declined by 93% to $26.6Mn down from $ 372.8Mn, and repatriation from FPI fell from $ 23.6Mn to $ 1.6Mn in 2MFY23. BR. Locust emergency, food security: World Bank may further downgrade $200m project World Bank is likely to further downgrade the $ 200Mn locust emergency and food security project for Pakistan, besides already cancelling a partial commitment of $ 104Mn bringing it down to $ 96Mn, after facing inordinate delay in implementation. Official documents revealed that the overall progress of the project towards achieving Project Development Objectives (PDO) has been downgraded to unsatisfactory as the project is now significantly behind schedule. BR. Date / Period Unit Value Change Daily USD-Interbank USD-Open MKT 27-Sep 27-Sep PKR PKR 233.91 233.75 -1.31% -1.50% KSE-100 index FIPI 27-Sep 27-Sep Pts. $ Mn 41,518 0.24 0.89% NM** Crude Oil 27-Sep $/bbl 78.50 2.35% Gold 27-Sep $/oz 1,636.2 0.09% Gold (10g) Local 27-Sep PKR 122,430 -1.79% Silver 27-Sep $/oz 18.34 -0.44% Cotton(KHI)-40 kg 27-Sep PKR 23,041 -2.27% Kibor-6M 27-Sep % 16.01 -0.04% Forex Reserves 12-Aug $ Bn 13.61 WoW 0.38% Jul-Aug 22 $ Bn 5.25 -2.18% YoY Remittances Exports* Jul-22 $ Bn 2.22 -4.76% Five sectors to get power for 9 Cents/kWh for Sept only Power Division has directed Discos and KE to provide electricity @ PKR 0.9/kWh all-inclusive to the five sectors (erstwhile zero-rated) for only Sept’22. BR. Imports* Jul-22 $ Bn 4.86 -10.48% Jul-22 $ Bn -2.64 14.77% $ Bn $ Bn -1.92 0.17 16.24% -16.54% PD seeks Rs93.43bn to settle GPPs’ payables Power Division has sought PKR 93.438Bn from Finance Ministry to settle payables to the Govt.-owned Power Plants (GPPs) at par with IPPs. According to sources, in FY23, PKR. 180.475Bn has been earmarked for payment to GPPs and IPPs in the budgetary allocation. In view of existing financial position of govt. owned power plants, Power Division has sent a summary to the ECC for release of PKR 93.438Bn in favor of Govt.-owned Power Plants (PKR. 43.698Bn PAEC, PKR. 33.636Bn WAPDA and PKR. 16.377Bn NPPMCL) that have reduced their tariff and the same should be adjusted from the remaining payable of respective GPPs. BR. Jul-Aug 22 Jul-Aug 22 Jul 22 LSM Growth* % 11.70 % 24.93 Jul-22 Avg. CPI Discount Rate % 15.00 Jul-22 Sources: KCCI Research, PMEX , NCCPL, KSE, SBP, PBS* ** Not Meaningful, WoW= week on week; YoY=Year on Year Indonesian relief aid handed over to Sindh authorities Coordinating Minister of Indonesia for Human Development and Cultural Affairs handed over the flood relief aid from the Govt. of Indonesia to Minister for Labor of Sindh and Minister for Social Welfare in a brief ceremony held at Jinnah International Airport Karachi on 27th Sept’22. BR. Section 7E: Aggrieved filers to be given more time, FBR assures LHC FBR has assured that it will give an extension of time to the taxpayers to file income tax returns, who feel aggrieved by the impugned Section 7E of the Income Tax Ordinance, 2001. BR. Delay in legal team hiring: Only Rs7bn GIDC recovered so far, PAC told Federal govt. has recovered only PKR 7Bn Gas Infrastructure Development Cess (GIDC) out of the total PKR 459Bn recoverable due to the delay in hiring a legal team for the pursuance of cases in various courts, the Public Accounts Committee (PAC) was apprised. The Petroleum Division reported that since the promulgation of the GIDC Act 2015, the total outstanding amount on account of GIDC is PKR 452Bn on 30th Jun’22. Out of which an amount of PKR 368Bn is sub-judice, amount of PKR 16.7Bn is outstanding due to circular debt, and the remaining amount of PKR 67Bn is under recovery by the SNGPL and SSGC. BR. \ List of Indicators Import of 2MMT of wheat: Private sector seeks to get the nod from govt. Private sector is seeking the federal govt.’s nod for the import of some 2Mn metric tons of wheat without subsidy to avoid shortage in the domestic market. The country has missed wheat production target and the crop output was about 27Mn tons for 2022 as against a target of 28.89Mn metric tons. Overall, the country is facing a shortage of 3-3.5Mn metric tons as the domestic wheat production was about 27Mn metric tons as against consumption of over 30Mn metric tons. Accordingly, TCP has finalized wheat import deals of over 1Mn tons, out of which some 0.7Mn metric tons of wheat has already arrived. Now, Cereal Association of Pakistan (CAP) has requested the govt. for permission of 2Mn metric ton import without subsidy. BR. Replacing NAPP with NAEPP: Nepra hints at slight review Nepra hinted at a slight review in its proposal of replacing National Average Power Price (NAPP) of PKR 19.32/Kwh with National Average Energy Purchase Price (NAEPP) of PKR 9/Kwh. The technical team also presented a model of net metering system according to which govt.’s peak tariff is PKR 31.79/unit excluding taxes. The cost as per Nizam Energy for 10-kW is PKR 170,000/kW. The units generated from this system were 14,892/annum. Annual saving tariff will be PKR 473,397, which implies that the payback period is 3.59 years. BR. ADB to approve $ 1.5Bn next month Speaking at a virtual news conference at the beginning of its 55th annual meeting from Manila, ADB President Masatsugu Asakawa said the $ 1.5bn countercyclical loan for Pakistan was under process and would be approved in Oct’22. This would be a part of its plans to provide $ 14bn to the Asia and the Pacific nations to ease a worsening food crisis posed by the impacts of climate change. Dawn. Courts give interim relief against PKR 45Bn taxes Two provincial courts have given an interim relief to the real estate dealers and bankers against payment of deemed income tax on the realty sector and additional tax on banks’ investment in govt. debt. The relief, though temporary until the courts decide the fate of legal clauses, will impact the govt.’s estimated revenue collection of PKR 45Bn. Tribune. Refund tab activated FBR has enabled a refund adjustment tab in the return forms for TY22, for enabling taxpayers to adjust their pending refund claims against admitted liability of TY22 at the time of filing tax returns. Dawn. Price of petrol likely to drop by PKR 9 The prices of petroleum products are likely to come down up to PKR 15 from 1st Oct’22 due to a sharp decline in international markets. Prices of petrol are likely to drop by PKR 9 in the initial working and HSD price is likely to be slashed by PKR 18. Tribune. Wheat sowing situation in flood-hit areas abysmal National Assembly Standing Committee on National Food Security was informed that the country needed 250,000 tons of wheat seed for the flood-stricken farmers but the amount received for the purchase of seeds was short of the requirement. Tribune. Pakistan seeks modern machinery Federal Minister for Industries and Production has urged international companies manufacturing agricultural equipment to introduce modern machinery in Pakistan to increase per-acre yield and reduce the loss of grain. The minister discussed a complete ban on the import of second-hand, reconditioned machinery in a meeting with a four-member Japanese delegation, headed by Kutoba Corporation’s Overseas Service Department Manager Agriculture Machinery, Haruhiko Nakano. Tribune. Trade Balance* Current Account Foreign Direct Inv. Major Currencies 305 295 285 275 265 255 245 235 225 215 205 195 185 175 165 155 145 Sep-21 GBP, 27-Sep-… EUR, 27-Sep-22, 223.0 USD, 27-Sep-… Dec-21 GBP USD Mar-22 EUR Jun-22 Sep-22 Source: KCCI Research Quote of the Day “The elevator to success is out of order. You’ll have to use the stairs, one step at a time.” Joe Girard Outstanding Domestic Debt of Public Sector Enterprises (PSEs) OGDC Steel Mills Corp. WAPDA PIA 6.6 6.3 5.7 42.5 43.2 43.2 72.5 63.6 67.4 182.1 153.3 141.8 1,089.70 1,170.40 1,232.50 Other PSEs Jun'22 Jun'21 Jun'20 Source: KCCI Research, SBP Note If any member is facing any issues pertaining to PakistanAfghanistan investment and trade policies or has project proposals is requested to share the information at secretary@kcci.com.pk for forwarding to the Board of Investment.